The 2012 Jumpstart Our Business Startups Act (“JOBS Act”) is aimed at making it easier for small businesses to raise funds. The JOBS Act requires the SEC to perform studies and write rules to implement the law. Toward that end, the SEC solicited comments on Title III of the act, which concerns crowdfunding (a broad term used to describe a wide pool of small investors with few restrictions, usually networked by means such as the internet).
On July 19th, Arbitration Resolution Services, Inc. (“ARS”) Executive Vice President and General Counsel Mark Norych submitted a comment letter urging the SEC to consider cloud-based arbitration as a way to resolve disputes between investors and crowdfunding portals. Norych points out that the nature of these disputes – which are expected to involve relatively modest amounts – makes them a perfect fit for streamlined online systems such as that used by ARS.